White Paper

Flexible Working Arrangements

3. Flexible Working Arrangements

In the literature about flexible working arrangements in the developed world, FWAs can include everything from weekend work to shift work, overtime, annual-hours contracts, part-time work, job sharing, flexitime, temporary/casual work, fixed-term contracts, home-based work, teleworking and compressed working weeks. Aside from Perpetual Guardian’s Four-Day Week trial, there is no example available of another company that has reduced work hours while maintaining full-time pay.

The supporting theory of FWAs, based on international reports and studies of worker motivation and productivity, is that giving people more time to spend managing their personal responsibilities will energise them for their professional ones. There is mounting evidence that these mutually beneficial agreements between employers and employees (providing alternate options as to when, where and how much a person works) have measurable psychological, social and economic impacts, for example:

a. FWAs can reduce costs. For instance, allowing people to work offsite some of the time cuts down on office space requirements and potential overhead costs; and an employee who has a sick child can simply work at home while caring for the child, rather than taking a sick day and costing the business.

b. Employees with FWAs widely report higher levels of satisfaction; JP Morgan Chase’s annual employee survey found that employees with an option of flexibility were much more likely to report overall satisfaction than those who felt they did not have access to flexibility.

c. Medical doctor and wellness expert Dr Frances Pitsilis reports that within the FWA literature, social exchange theory has been used to explain behaviours such as increased effort, which may be returned to an employer as a benefit in exchange for FWAs.

d. From an HR perspective, non-standard work patterns have been found to be related to decreased turnover in the private sector, while working away from the office was related to improved performance and reduced absenteeism. In general, absenteeism is less common in environments where managers are supportive of employees’ need for flexibility, because employees have the capacity to work longer hours (on a flexible basis) before work-life conflict becomes problematic. In the United States, Deloitte quantified its turnover-related cost savings due to the availability of FWAs at $41.5 million in one year alone. As it pertains to recruitment, a survey of 1,500 US workers found that nearly a third considered flexibility to be the most important aspect of an employment offer. Additionally, 80% of a cross-section of managers surveyed indicated that the flexibility offerings impacted the recruitment of top talent.

e. A study of the impact of Fortune 500 company profits in the WallStreet Journal found that firms’ stock prices rose an average 0.36% following announcements of flexibility initiatives. When looking at workplaces with established FWAs, researchers also found a positive association between the availability of FWAs (both remote working and schedule flexibility) and long-term financial performance.

f. FWAs are linked to a reduction in errors customer complaints; Deloitte reports that 84% of clients are satisfied or very satisfied with the service provided by employees with FWAs, and only 1% of clients are dissatisfied.

g. The data shows that when people are travelling to work every day during standard hours there are two main areas of stress: having to commute in peak traffic, and times when the job demands they stay late and miss out on the evening meal with family. Commuting in bad weather has also been cited as a cause of stress. If these factors are ameliorated or removed, the benefit to employees is massive, and includes higher job satisfaction and lower rates of burnout, depression and anxiety.

h. There is reduced psychological distress resulting from decreased work-family conflict. People with FWAs have more energy and psychological investment available for relationships, which tend to improve as a result, making for happier workers.

i. Safety can be improved by FWAs, for example in times of inclement weather (and higher risk of accidents) when a work-from-home arrangement can allow employees to telecommute safely from home. Hours that would otherwise be spent in traffic can be spent on productive work. For example, widespread FWA models across industry in Auckland would reduce the traffic congestion that is currently costing the city $1.3 billion a year, according to analysis by the NZIER.

j. Many firms are now focussed on improving the gender balance, closing the pay gap and offering more flexibility to allow for family/childcare obligations. FWAs allow a lot more people to become employable and employers to draw from a deeper pool of talent, with work-from-home arrangements allowing skilled women who might otherwise be at home with young children to take on paid work. Tech advancements allow for remote conference calls and webinars, and organisational cohesion is maintained by periodic face-to-face meetings with the team.

k. A predicted boom in flexible working could contribute US$10.04 trillion to the global economy by 2030, according to the first comprehensive socio-economic study of changing workplace practices. New Zealand’s share will be significant relative to the size and performance of our economy; between NZ$16.2 billion and NZ$18.1 billion is expected to be added, especially in several key industries, and between 74,000 and 83,000 additional jobs created. The largest New Zealand contributors to the expected increase are six sectors: property services, professional services, financial services, information and communications activities, public administration and business support services. The analysis, commissioned by Regus (part of the IWG group of companies) and conducted by independent economists, studied 16 key countries to delve into the state of flexible working both now and through to 2030.

l. New Zealand data on FWAs show that they aid employee outcomes like organisational commitment and job satisfaction – with the latter being the dominant predictor of job performance.[1] Thus, FWAs provide an opportunity for firms to enhance the work experience of employees through flexibility. That said, the biggest impediments to FWAs are managers within firms. Managers need to understand that trust is central to FWAs, and indeed, the four-day week. Professor Haar, who conducted the quantitative analysis of the Four-Day Week at Perpetual Guardian notes that employees trust in management went up significantly through the trial. This likely reflects the way that management’s decision to trial the Four-Day Week shows a fundamental trust in employees. Beyond this, employees also reported a significant increase in trust with their team members, because by having one member absent every day (say in a team of five), employees have to trust each other to get their work done. And this was supported through the trial. Overall, this increase in trust has benefits towards engagement, performance and retention, so trust provides a win-win outcome for both employer and employee through FWAs.